Correlation Between Alphabet and APT Satellite

Can any of the company-specific risk be diversified away by investing in both Alphabet and APT Satellite at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Alphabet and APT Satellite into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Alphabet Inc Class C and APT Satellite Holdings, you can compare the effects of market volatilities on Alphabet and APT Satellite and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Alphabet with a short position of APT Satellite. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alphabet and APT Satellite.

Diversification Opportunities for Alphabet and APT Satellite

0.41

Correlation Coefficient

Alphabet  APT Satellite

Very weak diversification

The 3 months correlation between Alphabet and APT is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Inc Class C and APT Satellite Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APT Satellite Holdings and Alphabet is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Alphabet Inc Class C are associated (or correlated) with APT Satellite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APT Satellite Holdings has no effect on the direction of Alphabet i.e., Alphabet and APT Satellite go up and down completely randomly.

Pair Corralation between Alphabet and APT Satellite

Given the investment horizon of 90 days Alphabet is expected to generate 1.96 times less return on investment than APT Satellite. In addition to that, Alphabet is 1.2 times more volatile than APT Satellite Holdings. It trades about 0.08 of its total potential returns per unit of risk. APT Satellite Holdings is currently generating about 0.18 per unit of volatility. If you would invest  24.00  in APT Satellite Holdings on October 7, 2024 and sell it today you would earn a total of  4.00  from holding APT Satellite Holdings or generate 16.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	24.19%
Values	Daily Returns

Alphabet Inc Class C  vs.  APT Satellite Holdings

Alphabet Class C

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Alphabet Inc Class C are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting basic indicators, Alphabet reported solid returns over the last few months and may actually be approaching a breakup point.

APT Satellite Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days APT Satellite Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward-looking indicators, APT Satellite is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Alphabet and APT Satellite

The main advantage of trading using opposite Alphabet and APT Satellite positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alphabet position performs unexpectedly, APT Satellite can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in APT Satellite will offset losses from the drop in APT Satellite's long position.

The idea behind Alphabet Inc Class C and APT Satellite Holdings pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Commodity Directory module to find actively traded commodities issued by global exchanges.